Dell shares barely budged on today’s announcement — they’re up 0.9% to $13.39 at mid-day — but have jumped 23% since January 14 when word of the planned deal leaked. Dell founder and CEO Michael Dell, who owns about 14% of the shares, and investment firm Silver Lake say that they’ll pay stockholders $13.65 in cash for each share. The financing includes a $2B loan from Microsoft. Dell’s board has a 45-day go-shop period to see if it can find a better deal. The Special Committee handling the review hired Evercore Partners to help. A rival bidder would have to pay a $180M termination fee if it beats Michael Dell’s offer within the go-shop period. After that, the termination fee rises to $450M. That “provides a real opportunity to determine if there are alternatives superior to the present offer,” the company’s lead director Alex Mandl says. But Dell says he’s confident his team “can deliver immediate value to stockholders” adding that he’s “committed to this journey and I have put a substantial amount of my own capital at risk.” If he prevails, he would remain CEO, and Dell would keep its headquarters in Round Rock, Texas. The company has suffered from its inability to keep up with consumers’ demand for smart devices including smartphones and tablets. Silver Lake Managing partner Egon Durban says that the group will “invest in long-term growth initiatives and accelerate the company’s transformation strategy to become an integrated and diversified global IT solutions provider.”
That means “Dell is planning radical changes to its strategy and product roadmap,” says Carter Lusher, chief IT analyst at analysis firm Ovum. “While the company might come out of this transition stronger with a product lineup that better meets the needs of businesses and public sector organizations, there will be uncertainty as to what products and services stay, get strengthen, or get eliminated.”
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